The numerator is broader than "the mortgage." Anything secured by the property belongs in it. That includes a purchase-money second mortgage, a home equity loan taken years later, a home equity line of credit, and financing recorded against the property for improvements. Whether a given obligation counts is a question about the lien, not about who the borrower is or what the money was for.
The denominator is a valuation, and which valuation is a real question. The regulation's phrasing is careful: the reported figure is "the value of the property relied on in making the credit decision." A lender may compute the ratio more than once, and the commentary addresses that directly, saying that where an institution calculates a combined loan-to-value ratio both under its own requirements and under a secondary market investor's, and relies on the investor's in deciding, the investor's is the one reported. The practical consequence for a borrower is that the ratio is not an objective property of the house. It is a ratio computed against whichever valuation the decision was made on, which is why an appraisal that comes in low changes the answer even though nothing about the debt has moved.
The third ratio, and the one that surprises people. Fannie Mae's Selling Guide states eligibility requirements in terms of "LTV, CLTV, or HCLTV ratios." The last of those, the home equity combined loan-to-value ratio, differs from CLTV in one respect that matters enormously to a borrower with an open line: it counts the full credit limit of a home equity line of credit rather than the amount currently drawn. FHA reaches the same result without a separate name. Its handbook, setting the maximum combined loan-to-value for a rate-and-term refinance, instructs that "for open-end line of credit, the Mortgagee must utilize the maximum accessible credit limit of the subordinate lien to calculate the CLTV ratio."
The logic is sound from the lender's side. A line of credit the borrower can draw tomorrow is money the property may have to answer for, and the second lender's cushion is only real if the first lienholder's exposure is measured at its maximum. The logic is also invisible from the borrower's side, because the monthly statement on an undrawn line says zero. A homeowner who opened a $100,000 line during a refinance five years ago, never touched it, and forgot about it can be turned down for a new second lien on the strength of a balance that does not exist. The fix is usually mechanical: close the line, or ask the lender to reduce the limit, and get written confirmation before the new application is underwritten.
Who cares about the combined figure, and why. The first-lien lender cares about it less than a borrower expects, because it is first in line and gets paid first from any forced sale. The second-lien lender cares about almost nothing else, because it is paid only after the first is satisfied, so the entire cushion protecting it sits between the combined ratio and 100 percent. That is why ceilings are stated in combined terms on home equity products and why the number that decides a home equity application is not the one printed on the first mortgage statement.
Program ceilings are policy, not law, and they move. FHA caps the combined loan-to-value at 97.75 percent on a rate-and-term refinance, per HUD Handbook 4000.1 section II.A.8, whose origination pages carry a revision date of 08/14/2019, and sets a lower ceiling for a cash-out refinance, which the cash-out page covers. Conventional home equity lenders commonly set their own ceilings well below either. None of these are indexed figures; they are underwriting policy, and the only reliable version is the one in the program the loan is being written under. The plain loan-to-value ratio and its own threshold ladder, including the points at which mortgage insurance attaches and falls away, belong to the loan-to-value ratio page.
